How Walmart plans to win online grocery

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How Walmart plans to win online grocery

By Gina Acosta - 10/10/2017

Walmart says its digital transformation strategy is resonating with shoppers, especially food shoppers.

The company said it is poised to yield a 40% increase in e-commerce sales next year. The company also plans to at least double the number of its U.S. stores that offer online grocery pickup.

As more consumers shift to online grocery shopping, Walmart is accelerating its digital capabilities in order to dominate food retail. It's a strategy that seems to be working.

At its annual investor meeting in Bentonville, Ark., Walmart President and CEO Doug McMillon provided an update on how exactly the company is uniquely positioned to win.

“We have good momentum in the business, we’re executing our strategy and moving with speed to win with the customer, who is more connected than ever and embracing tools that will save them both time and money,” said McMillon. “We’re combining the accessibility of our stores with eCommerce to provide new and exciting ways for customers to shop. I’m proud of the team we have in place, the work we have underway and how we are positioned for success in the future."

McMillon also said the retailer plans to open fewer than 15 SuperCenters in the U.S. next year. Walmart expects total net sales to rise at least 3% in fiscal 2019, and said it had expected to buy back $20 billion of its shares over two years, a significant chunk of its $240 billion market capitalization.

The update comes after Walmart's announcement this month regarding a new Mobile Express Returns service. The program allows customers to use the retailer's app to initiate a return, completing the process by dropping the item off at any store's Mobile Express Lane and scanning the app's QR code.

The new mobile returns service will be available first for Walmart.com purchases, with in-store purchases added early next year. Walmart also said it's currently planning a similar returns process for items purchased from third-party sellers on Walmart.com.

Additionally, as early as December, customers returning select items will see an option in the Walmart app allowing them to instantly receive their refund without even making a trip to the store to physically return the item. This offer will initially be available on select household items, such as shampoo and color cosmetics, with other items to be added over time.

“We know that returning an item and waiting for a refund, especially for a product purchased online, isn’t always seamless, so we’ve completely transformed the process for our customers – whether they are shopping in stores or at Walmart.com,” said Daniel Eckert, senior vice president, Walmart Services and Digital Acceleration, Walmart U.S. “By leveraging our physical stores and the Walmart app, we’re changing the returns game in ways that only Walmart can do. Throughout the year, we’ve added features to our app to make it an even more powerful, time-saving tool for our customers shopping online and in our stores; Mobile Express Returns is our latest enhancement.”

Eckert told CNBC that he recently purchased floor cleaner at Walmart.com, which became damaged in transit and made for a messy, cumbersome return. Under the new return policy, he'd be able to immediately receive a refund, while the store wouldn't have to bother with processing a defective return, Eckert said.

Earlier this year Amazon launched what it calls "returnless refunds," a policy that enables Amazon or third party sellers to offer a refund without taking back an item that may be expensive to ship and hard to resell.

Walmart's new mobile returns program is just a continuation of the retailer's aggressive digital strategy.

Last year Walmart paid $3.3 billion for e-commerce startup Jet.com. Since then it has also acquired Moosejaw, Bonobos and Modcloth.

The company has also been busy improving its shipping offers and expanding its popular Grocery Pickup program nationwide.

In the first two quarters of 2018, Walmart's digital sales grew 63% and 60%, while overall global sales increased 7% and 12%.

This is the third Mobile Express offering announced this year by Walmart and comes at a time when the retailer is doubling-down on innovation within the app to deliver a more integrated shopping experience.

Mobile Express Money Services is now available chainwide and Mobile Express Pharmacy will be available nationwide later this year. In addition, according to a study by InfoScout, Walmart Pay now ranks as the No. 2 mobile wallet, despite launching chainwide only 16 months ago, and now offers customers instant access to their Walmart credit card.

Walmart said it expects to roll out even more app features that make shopping faster, easier and more convenient in 2018.

Costco announced last week that it has launched two grocery delivery services. Meanwhile, Target has expanded its next-day delivery services and rolled out new digital features.

Walmart currently operates more than 11,600 stores under 59 banners in 28 countries and e-commerce websites in 11 countries.